National Security and Investment Bill

Lord West of Spithead Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 4th February 2021 Lords Chamber

[Lord West of Spithead (Lab)]

My Lords, first, I congratulate my noble friend, no longer in his place, on his maiden speech. I have to say, though, that Jeremy Corbyn is not my cup of tea, but clearly my noble friend Lord Woodley is a decent fellow, because he is an ex-sailor.

For several years, a number of us have been concerned about the impact of inappropriate takeovers and dual ownership of firms that were key to our critical national infrastructure and essential sovereign capability of cutting-edge research, technology, and equipment production and control. Some seven years ago, the ISC became very aware of this, and it was clear to it that national security issues around investment decisions were not properly being taken into account, so it said to the Government that they should take some action. I am therefore pleased to see this Bill progressing through Parliament. The legislation is vital to protect the UK’s security across a range of areas.

Having waited seven years for the Government to bring forward legislation, it is beholden on us and them to get it right, and there is one rather large hole in the Bill: there is no proper oversight by Parliament. In Clause 61, there is provision for an annual report to this House, but that report will contain the bare minimum of detail. The Minister has told the other place that the BEIS Select Committee will provide further oversight, and indeed that is the case when it comes to the economic aspects of decision-making. The BEIS Select Committee cannot see detailed classified national security material and, by their nature, decisions made under this legislation will require deep engagement with sensitive material and a clear-eyed understanding of the possible conflict between encouraging business and protecting our national security.

There is currently no provision for oversight of national security material on which decisions will be taken. The ISC was established in 1994 to provide exactly that oversight: to examine matters that Parliament could not, because they are too sensitive to be discussed in public. It is therefore surprising that the Bill, as drafted, does not provide for oversight by the ISC. The investment decisions that the Bill covers are currently taken, in modified form—as has been mentioned by a couple of previous speakers—by national security elements within the Cabinet Office. Therefore, they are within the purview of the ISC. As these decisions will move to BEIS, that oversight will now be removed, so the Bill is in fact a step backwards.

During the passage of the Bill through the other place, it was proposed that the ISC should receive an annual report on the sensitive issues covered by the Bill. In response, the Minister said that the ISC could always request that information from his department. That is, frankly, not good enough. As my colleagues on the ISC have already noted, without statutory provision for routine ISC scrutiny in the Bill, there is a possibility that, no matter how well intentioned this Government may be, future Governments may refuse to provide such information to the ISC. The Minister had already argued in the other place that the ISC’s remit does not extend to oversight of BEIS work, which undermines his later claim that the ISC can request information.

Therefore, unless the Minister says something to change my view, I intend to submit an amendment that would expand the current reporting requirements to include reporting to the ISC, incorporating details of the national security decision-making process into the existing annual report in Clause 61, allowing the Secretary of State to redact those matters from the report laid before Parliament and instead provide them to the ISC by way of a secret annexe. I hope the Minister will acknowledge that this is a constructive approach, in that it would lessen the burden upon the new BEIS investment security unit. If, for some extraordinary reason, the Minister is unable to accept this, the alternative would be to assure this House that the work of the new unit will be brought within the remit of the ISC by including it within the memorandum of understanding that sits underneath the Justice and Security Act.

It is critical that there is oversight of matters that Parliament itself cannot oversee. This House should not be passing legislation that allows for action in the name of national security without providing for oversight of that action.

National Security and Investment Bill

Lord West of Spithead Excerpts

Committee stage
Tuesday 16th March 2021 Lords Chamber

[Lord Butler of Brockwell (CB)]

My Lords, the noble Lord, Lord Rooker, has added his name to this amendment, although he is not able to speak today. I shall also speak to other amendments in this group.

Something strange is happening here. The Bill gives the Government extraordinary powers to intervene in, and possibly prevent, private sector commercial transactions. I accept that there may be occasions on which the Government need to protect British industries against incursions from foreign companies, particularly if those companies are under the control of unfriendly states, but these powers are extraordinary and their exercise, and the justification for that exercise, will often depend on intelligence information that the Government cannot, naturally, make public. How then is Parliament going to scrutinise and the Government to justify the use of these powers in those circumstances?

In the Intelligence Services Act 1994, the Conservative Government established a parliamentary mechanism precisely for this purpose, by setting up the Intelligence and Security Committee of Parliament. The coalition Government reinforced the committee’s powers in the Justice and Security Act 2013. That committee comprises Members of both Houses of Parliament with experience of intelligence who are admitted within the ring of secrecy so that they can have access to highly classified information and advise the Government and Parliament on its use. I declare an interest, having served on the committee for five years. Yet the Government have refused to provide, in the Bill, for the ISC to have a role in scrutinising the use of the powers in it. It is as if the Government have acquired a watchdog, yet are unwilling to let it bark just when it is needed.

This point was raised by the Opposition parties in the other place, and the Minister produced repeated excuses for denying the ISC an explicit role. Ultimately, the Minister said that the ISC could review the annual report which the investment security unit established by the Bill is required to make to Parliament. That made it necessary for the chairman of the ISC, Dr Julian Lewis, to intervene and say that the annual report would be a public document, which could not, by definition, contain classified information. The Minister’s reply to that was that the ISC could subsequently ask the Secretary of State for such classified information.

The noble Baroness, Lady Hayter, with the support of the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, has tabled Amendment 82, requiring that the Secretary of State should publish a separate annual report to the ISC which can include classified information. The noble Lord, Lord West, who is your Lordships’ current representative on the ISC, has put down an amendment, with the support of the noble Lords, Lord Rooker and Lord Campbell of Pittenweem, requiring classified information to be contained in a confidential annexe to the annual report of the investment security unit, to be made available only to the ISC. I will support these amendments if my own amendment is not acceptable, but if I may respectfully say so, an annual report after the event involves examining the operation of the stable door after several horses may have bolted.

My own amendment requires that, when a transaction is called in, any relevant intelligence should be made available to the ISC, and the ISC should make a report to Parliament before the Secretary of State makes a final order. The assessment period of 30 days under the Bill, extendable to 45 days, provides adequate time for the ISC to assess the intelligence provided to it, take evidence and give its opinion to Parliament. It seems to me unlikely that there will be so large a volume of transactions actually called in as to make this an unsustainable burden. In this House, we are used to Select Committees such as the Delegated Powers Committee and the Constitution Committee scrutinising Bills in short order and reporting on them to the House before the Bills go forward. If Parliament is to have any effective scrutiny of the use of the powers in the Bill, this seems preferable—if it is practicable—to an annual report after final orders have been made.

It is a matter for speculation why the Government have been so coy about giving the ISC an explicit role in the Bill. Paragraph 8 of the memorandum of understanding agreed between the Government and the ISC after the 2013 Act, says that

“only the ISC is in a position to scrutinise effectively the work of the Agencies and of those parts of Departments whose work is directly concerned with intelligence and security matters.”

Those were the words agreed between the Government and the ISC. The irony is that the ISC’s role is potentially helpful to the Government. Only the ISC can have access to the intelligence information justifying the Government’s intention to intervene. To give an example, I recall that, when I was a member of the ISC, there was a press story that GCHQ was piggybacking on the American NSA to obtain intelligence that it could not obtain under its own powers. The ISC examined the records and was able to reassure Parliament and the public that the reports were false.

Is the reluctance on the part of the Government a hangover from their embarrassment over publication of the ISC’s report on Russian interference before the 2017 election, or is it a result of government pique about the committee’s appointment of its own chairman in place of the Government’s nominee? Whatever it is, it is difficult to understand what the Intelligence and Security Committee is there for if not to have a role on behalf of Parliament and the public in sensitive matters of this sort. I beg to move.

[Lord West of Spithead (Lab)]

My Lords, I am speaking to my Amendment 78 and will touch on Amendment 70 in the name of the noble Lord, Lord Butler, to which he has just spoken, as well as Amendment 82 in the name of my noble friend Lady Hayter and Amendment 86 in the name of the noble Lord, Lord Lansley. All relate to the same concern and try to resolve it in slightly different ways. I also thank the noble Lords, Lord Campbell of Pittenweem and Lord Rooker, for their support, and the noble Lords, Lord King and Lord Janvrin, for having expressed support for the measure in broad terms. It is rather good that this is the first amendment this afternoon being raised from this side rather than from the Government; that is quite interesting I think.

Noble Lords will be aware it was the Intelligence and Security Committee of Parliament which first raised the fact—and the alarm—that when the Government were considering major investment decisions, national security concerns were not being taken into account. There are those in this House who served on the committee at that time and should be thanked for their work bringing this issue to light. This was some seven years ago, and noble Lords will know from my previous interventions on this topic that I strongly support the need for this Bill, as I think all of us do in this Chamber.

However, there is a glaring hole in the legislation which the Government have not yet resolved: namely, there is no meaningful oversight. This Bill has national security at its heart, yet the Government will not let anyone oversee this secretive heart. The Minister has said that the ISC—the one body Parliament expressly established to oversee secret matters on its behalf—will not be given proper oversight of this secret activity. The offer that the ISC can scrutinise the public report and ask for any further information it wants is not good enough. The public annual report is just that, as the noble Lord, Lord Butler, said—it is public. Parliament itself can therefore scrutinise it, so there is no role for the ISC, which is designed to look at secret reports, not public ones. The Minister says that the ISC can request further information. But there is no obligation for that information to be provided. The ISC can only require information from those bodies that fall within its remit, and the investment security unit is not one of those bodies.

Without specific provision, there is a possibility that, even if this Government are well intentioned—which I am sure they are—future Governments may refuse to provide such information to the ISC. Consequently, I am afraid the Minister’s proposals do not meet the requirement for proper oversight. Worse than that, they represent a step backwards from the current oversight provisions. The unit that currently takes these decisions—the investment security group in the Cabinet Office—is overseen by the ISC. By moving this activity to the investment security unit in BEIS, the Government are actively removing it from ISC oversight. I am sure that this cannot be what the Government intend. This is the glaring hole in the Bill that we must fix, and my amendment does that. I thank the noble Lords, Lord Rooker and Lord Campbell of Pittenweem, for putting their names to this amendment.

Clause 61 mandates the Secretary of State to produce an annual report to Parliament. The information in that report is limited and obviously will not include any sensitive security information. My amendment to Clause 61 will add to that annual report further categories of information: details about the jurisdiction of acquirers; the nature of national security concerns raised; the particular technological or sectoral expertise being targeted; and any other information that the Secretary of State deems instructive on the nature of national security threats uncovered in the new regime.

The amendment then provides a mechanism for the Secretary of State to redact any of this information from the public report, should it be deemed damaging to national security. That information must be moved into a classified annexe, ensuring that, if Parliament cannot scrutinise it, the ISC can, on behalf of Parliament. This is an approach already used by organisations such as the Investigatory Powers Commissioner’s Office under the Investigatory Powers Act 2016.

The amendment proposed by the noble Baroness, Lady Hayter, and the noble Lord, Lord Fox, provides for a second separate annual report to the ISC. It seeks to achieve the same outcome as mine—namely, oversight of the security matters at the heart of the Bill. My understanding was that Ministers in the other place had found the annexe solution more palatable, in that it would minimise the reporting burden on the new unit. However, the ISC itself is ambivalent as to whether there is a secret annexe or a separate report; the key is that there is reporting on the security aspects, in whatever form that takes.

This is not a power grab by the ISC—far from it; we have more than enough work to do as it is, and nor do we have any interest in the wider work of BEIS. It is only the intelligence and security work of the new unit, which is, after all, our job. The ISC was expressly established to scrutinise the intelligence and security activities of government—as the noble Lord, Lord Butler, said—initially, within the three intelligence agencies, and then from 2013, throughout the full national security apparatus. That change in 2013 was a result of the Justice and Security Act. The long title of that Act refers to

“activities relating to intelligence or security matters”,

and these are set out in a memorandum of understanding under the Act, which was then deemed to be a practical vehicle for listing those bodies overseen by the committee, since it could be easily kept up to date. This was best explained by the then Security Minister, who, during the passage of the Act, said:

“Things change over time. Departments reorganise. The functions undertaken by a Department one year may be undertaken by another the following year.”—[Official Report, Commons, Justice and Security Bill Committee, 31/1/13; col. 98.]


And that is exactly what has happened.

Under this Bill, intelligence and security activity is moving from the Cabinet Office to BEIS, yet the Government have not updated the MoU to include it. They have not honoured their clearly stated intention that the ISC should have oversight of all government intelligence and security activities, and it is not just this unit; other units have been set up in other departments to carry out national security and they have not yet been added to the ISC’s MoU. This is not good enough.

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[The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)]

I have had four requests to speak after the Minister, from the noble Lords, Lord West and Lord Rooker, the noble Baroness, Lady Hayter, and the noble Lord, Lord Campbell. I will call them in that order. Lord West of Spithead?

[Lord West of Spithead (Lab)]

My Lords, I am a poacher turned gamekeeper, as a fully signed-up member of the rolled-up trouser-leg and funny handshake brigade. For many years in the intelligence world, I hated the thought that government, Parliament or anyone else could look at my intelligence; how much nicer not to give any of that away. I am very glad that system does not work in this country. We have set up a mechanism whereby Parliament can see that highly sensitive intelligence that all of us involved in that world are immediately nervous when anyone touches. Of course if you have that intelligence, you want to hang on to it and not tell other people about it. It sounds to me as though the BEIS Select Committee will be delighted that it is to be the one making all the decisions based on the intelligence that it has. I do not really like that as a way of going forward. I could say a lot more about the response from the Government because I am not very happy about it.

Can the Minister look again at this debate and what has been asked for, because it seems very sensible for the ISC, which after all was tasked in the Justice and Security Act to do exactly this? The BEIS Committee was not. It is not too much to ask that this is looked at; it sounds very sensible.

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for his courteous comments. Of course I will review the contents of this whole debate to see whether there are any lessons that I can learn from it.

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[Lord West of Spithead (Lab)]

My Lords, I am going to be using secondary rather than main armament for this particular amendment.

I see Amendment 91 as more of a probing amendment than anything else. It is in fact a direct recommendation from the HCDC report, Foreign Involvement in the Defence Supply Chain, which came out last month:

“The Ministry of Defence’s open and country-agnostic approach to foreign involvement means that the defence supply chain has been open to potentially hostile foreign involvement, with reports of companies being owned and influenced by foreign Governments whose values and behaviours are at odds with our own”.


That is, of course, part of the whole point of this Bill. It also said:

“The Ministry of Defence should publish a list of countries it considers friendly and from whom investment should be encouraged. All those countries falling outside of this list should be barred from investing in the UK’s defence supply chain”.


The committee’s reasoning was that these companies, particularly the SMEs and smaller companies, need to know because they do not have the ability to initially assess the risk of dealing with some of the countries with which they often come into contact, and it was felt that this needed to be made clear. This would mean that time and money would not be wasted pursuing contracts and deals that were not going to be allowed. It all relates to that high degree of certainty to which so many of the amendments discussed today have related. I need say no more than that.

[Baroness Smith of Newnham (LD) [V]]

My Lords, this is my one foray into the National Security and Investment Bill, and I am speaking to Amendment 91, in the names of the noble Lords, Lord West of Spithead and Lord Alton of Liverpool, and myself.

As the noble Lord, Lord West, pointed out, this is in many ways a probing amendment, but it is very important. The relevance is clear: the HCDC report talks about the presence of Chinese business already in the defence supply chain. It goes slightly wider than that; anyone who has been in the armed services or happens to be in the Armed Forces Parliamentary Scheme might have looked at the labels of the uniforms—the camouflage—and noticed that they were made in China. I have always thought it slightly strange that NATO-issued uniforms should be made in China, but that seems to be the case. That does not necessarily endanger our national security, but it does raise some very odd questions about what we are actually doing and why we are purchasing kit from China. The HCDC notes that seven companies in the defence supply chain have been acquired by Chinese companies; that at least needs to be looked into.

This is a very modest amendment, which asks for a report. It does not go quite as far as the HCDC recommendation, because it does not say that other countries should be barred from investing in the supply chain, but will the Minister consider what signals the current approach to allowing investment in the defence supply chain sends, particularly on the day that the integrated review has been published?

National Security and Investment Bill

Lord West of Spithead Excerpts

Report stage
Thursday 15th April 2021 Lords Chamber

Moved by

[Lord West of Spithead]

24: Clause 61, page 36, line 15, at end insert “, except for any confidential annex prepared under subsection (2A)”

[Lord West of Spithead (Lab)]

My Lords, I will also speak to my Amendment 33, which is consequential to Amendment 24 and part of it. Both are supported by the noble Lords, Lord Butler of Brockwell, Lord Campbell of Pittenweem and Lord King of Bridgwater —a pretty impressive front row, I think noble Lords will agree. The amendments have general support across the House—I know this from my ex-CDI hat, having gone around and checked. I should make it clear that if the Government are not able to resolve this issue, I intend to test the opinion of the House on these amendments.

In Committee, the question of oversight of the investment security unit was raised—specifically, that the Bill does not allow for any oversight of the sensitive intelligence of its work, and that that oversight should be provided by the Intelligence and Security Committee of Parliament. There are many in this House who have served on the ISC, and who were therefore very concerned—as I was—by some of the misunderstandings about the operation of the ISC put forward by the Minister in Committee and what appeared effectively to be a reneging by the Government on the very clear commitments made to Parliament during the passage of the Justice and Security Act.

I assume that the Government accept that there should be a process for evaluating the national security implications of investment in British companies. That concern was first raised by the ISC. Indeed, the Government have stated that the Bill puts national security concerns at the very heart of the process—so why are those national security concerns which will be at the very heart of the process not to be properly overseen? It would mean the Government avoiding scrutiny of their decisions, and that is precisely what Parliament is here to ensure does not happen.

The Government have said that they expect the intelligence scrutiny to be undertaken by the BEIS Select Committee. With the greatest respect to the BEIS Select Committee, which is eminently qualified to scrutinise the work of BEIS, it cannot provide scrutiny of intelligence, because it cannot have access to all the national security material concerned.

The Minister has argued that the BEIS Select Committee does have access to sensitive material, and I grant that, in theory, that may be the case. The Osmotherly Rules allow the Minister discretion to give Select Committees top secret information. In practice, however, that is not the case. We know that the BEIS Select Committee has not been given any top secret information—sensitive information perhaps, but not top secret information. The reality is that it cannot be given top secret information. The BEIS Select Committee, with its excellent chairman, members and staff, cannot be given top secret material because it does not have the requisite security apparatus in place to do so. The committee’s staff do not have the security clearance required to see such material, and the committee does not have the facilities to store or discuss top secret information or have a statutory process to safeguard against the publication of top secret material. Therefore, unless the Government are intending to break their own rules on the handling of top secret material—something that would prompt an ISC inquiry in itself— the BEIS Select Committee cannot provide the scrutiny required. It cannot consider the national security material at the heart of the decision, and therefore the decision itself.

Now that we have established that the BEIS Select Committee cannot in practice be given the top secret material in question, and therefore cannot provide oversight, the question is, who can? Fortunately, the Government and Parliament had the foresight to create a body which can be given top secret material on a regular basis because it does have the requisite security apparatus in place. In 1994, the Intelligence and Security Committee was established expressly to scrutinise the intelligence and security activities of Her Majesty’s Government.

The ISC’s remit was extended through the Justice and Security Act 2013. Noble Lords will have heard it said during earlier stages in this House that the JSA provides the ISC with oversight of the three intelligence agencies. That is, perhaps, a little misleading. The ISC does not only oversee the agencies: it was established to oversee all intelligence and security matters across Government—or at least that was what Parliament was told.

The long title of the Justice and Security Act is,

“An Act to provide for oversight of the Security Service, the Secret Intelligence Service, the Government Communications Headquarters and other activities relating to intelligence or security matters”.

The memorandum of understanding which sits underneath the JSA, and which was expressly agreed by the Prime Minister, says that this means,

“those parts of Departments whose work is directly concerned with intelligence and security matters”.

Both Parliament in the JSA, and the Government in the MoU, have already expressly agreed that the ISC has oversight of all intelligence and security matters across Government.

In case there can be any lingering doubt, I draw your attention to the commitment given by the then Security Minister during the passage of the Bill when he said that it was,

“the intention of the Government that the ISC should have oversight of substantively all of central Government’s intelligence and security activities to be realised now and in the future”.

I trust the Minister has noted the wording there: “now and in the future”.

At the time the MOU was written there were seven such organisations, and these are therefore listed in the MOU. The then Security Minister also made it very clear during the passage of the Bill that the MOU was intended to be updated. He told Parliament:

“Things change over time. Departments reorganise. The functions undertaken by a Department one year may be undertaken by another the following year. The intelligence world is no different from any other part of Government ... An MOU is flexible: it can be changed much more easily than primary legislation”.—[Official Report, Commons, Justice and Security Bill (Lords) Committee 31/1/2013; col. 98.]


Clearly, the Minister’s argument that the ISU is not listed in the MoU is irrelevant. That is what the Minister said. His Government have already committed to changing the MOU when necessary in order to ensure the ISC has oversight of all intelligence and security matters. It really could not be any clearer. It is therefore of very grave concern that, despite Parliament’s clear intent and the Government’s clear commitments, oversight is being expressly denied.

The Minister also said that the ISC does not need to be given oversight expressly because the ISC can scrutinise the public report and can ask for other information about the ISU. Again, I am afraid this misses the point entirely. Of course the ISC can ask for information: we can ask for information from any part of the Government, but that does not mean to say that they will give it to us. By contrast, the organisations listed in the MoU—and therefore within the Committee’s remit—are required to provide information to the ISC. This is quite a different proposition, and demonstrates why the ISC should expressly be given oversight.

One last argument that has been put forward is around demarcation. There is concern that the work of BEIS should be overseen by the BEIS Select Committee, and therefore concern that to give the ISC oversight of the work of the ISU would have the ISC parking its tanks on the BEIS Committee’s lawn. This is simply not the case. The ISC chairman has already discussed this with the chairman of the BEIS Committee and they recognise that this issue cannot be overseen by the BEIS Committee and that some accommodation is required.

The ISC already oversees parts of departments that, for the most part, fall to a departmental Select Committee. The OSCT—I think it is now called Homeland Security—in the Home Office is just one such example, and the ISC and HASC have worked harmoniously for some years. I draw the Minister’s attention yet again to the commitments already given in this respect. The MoU clearly states that:

“Only the ISC is in a position to scrutinise effectively the work of the Agencies and of those parts of Departments whose work is directly concerned with intelligence and security”.


This will not affect the wider scrutiny of departments such as the Home Office, FCO and MoD—ditto BEIS —by other parliamentary committees. It really could not be any clearer and the Government have already recognised that demarcation is not a problem. So, I hope the Minister does not seek to put it forward today as an argument against ISC oversight.

I trust that I have demonstrated thus far why proper oversight is needed, why that can only fall to the ISC, why there is no reason for it not to fall to the ISC, and how the Government have already given commitments previously to Parliament that the ISC will oversee these matters. Now perhaps I might explain the amendment I have laid, with the support of the noble Lords I have mentioned. It seeks to provide this missing oversight and thereby enable the Government to honour their commitment.

Clause 61 mandates the Secretary of State to provide an annual report to Parliament. The information in that report is limited, and obviously will not include any sensitive security information. My amendment to Clause 61 would add two further categories of information to that annual report and provides a mechanism for the Secretary of State to redact any of this information from the public report, should it be deemed damaging to national security. That information must be moved into a classified annexe, understandably, which must then be provided to the ISC, thereby ensuring that if Parliament as a whole cannot scrutinise it—which clearly it cannot because of its classification—the ISC can.

Noble Lords will have noticed that this amendment simplifies the amendment I laid in Committee. The ISC has consistently tried to engage with the Government on this issue, to understand their concerns about our approach, and to try to chart a course through. Despite this, the committee and I remain wholly ignorant of the real reason for the Government’s intransigence. The arguments put forth by the Minister in this House in Committee were flawed, I am afraid, as I think I have shown. They cannot therefore be the real reason why the Government appear to be seeking to renege on the commitments given to Parliament during the passage of the Justice and Security Act.

The noble Lord, Lord Butler, has questioned whether there is some deep-seated dislike of the ISC at the heart of Government. Certainly, oversight is not comfortable, but it is not meant to be comfortable. I cannot believe that the Government would prioritise a petty squabble regarding the committee’s Russia report or the chairmanship of the committee over the clear commitments that they have given to Parliament. I am sure that cannot be the case, knowing the Minister as I do. We will therefore see the Government, I hope, honour their commitments today.

To show that I am an unusually flexible naval officer, I wish to reiterate the offer I made to the Government in Committee. If our amendment is unacceptable, for some reason that they have not yet told us, then the alternative is to put the Investment Security Unit into the MoU and provide for oversight by the ISC in that way. The MoU was intended to be a living document; it is very simply amended by way of an exchange of letters between the Prime Minister and the committee chairman. Perhaps the Minister was unaware of the simplicity of the mechanism, when he said that putting the Investment Security Unit into the MoU was a “substantial amendment”.

The Minister may be unaware that in the work of the Investment Security Unit, the unit which currently takes these decisions is the Investment Security Group in the Cabinet Office, and that is currently overseen by the ISC. Therefore, adding the Investment Security Unit to the MoU is not some radical step but simply preserves the status quo, rather than actively removing it from ISC oversight.

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[Lord Callanan (Con)]

My Lords, perhaps I may start by welcoming back to the Front Bench the noble Lord, Lord Rooker, who is an extremely adequate substitute, if I might say. It is a delight to see him back and fully recovered from injury.

There have been a lot of analogies about rugby and positions in this debate. I did not really play much rugby in my career, which is probably a good thing, but the occasional time that we played at school, I seemed always to be the hooker, which seemed, in the poor quality of rugby that we played, to be the one in the middle of the scrum being kicked by everybody else—somewhat appropriate in this debate.

I thank the noble Lords, Lord West and Lord Butler, for their Amendments 24 and 33, which would require the Secretary of State to provide additional information on regime decisions, either in the annual report, or, where details are too sensitive to publish, in a confidential annexe to the Intelligence and Security Committee. This information would include summaries of decisions to make final orders or to give final notifications, and summaries of the national security assessments provided by the security services in relation to those decisions.

A number of noble Lords have spoken with such passion and knowledge on this important issue, both in this debate and when we previously discussed amendments in this area during Grand Committee. I am particularly grateful—I say this genuinely—to the noble Lords, Lords West and Lord Butler, for their careful consideration of the words used by my colleague my noble friend Lord Grimstone during Grand Committee, and for their continued pursuit of an amendment that attempts to satisfy all parties.

The noble Lords’ amendment would effectively require the Secretary of State to include material provided by the security services in a confidential annexe. Of course, the ISC is already able to request such information from the security services as part of its long-established scrutiny of those organisations, as is set out in the Justice and Security Act 2013 and its accompanying memorandum of understanding.

I will directly address the issue raised by the noble Lord, Lord West, and others, about the BEIS Select Committee and its access to sensitive or classified information. The Government maintain their view that there is no barrier to the committee handling top-secret or other sensitive material, subject to agreement between the department and the chair of the committee on appropriate handling. As part of its role, the BEIS Select Committee can request information, which may include sensitive material, from the Secretary of State for BEIS, including on the investment security unit’s use of information provided by the intelligence and security agencies. The Select Committee already provides scrutiny of a number of sensitive areas and there are mechanisms in place for them to scrutinise top-secret information of this kind on a case-by-case basis.

The amendment would also require sensitive details to be provided to the ISC of the Secretary of State’s decisions in respect of final notifications given and final orders made, varied, or revoked. As we discussed earlier, the Bill already provides that the Secretary of State must publish details of each final order made, varied, or revoked. The Government have also recognised that providing this information at an aggregate level will be helpful, and Amendment 32 in my name would require the Secretary of State to include the number of final orders varied and revoked in the annual report. Even without Amendment 32, Clause 61 already requires the report to include the number of final orders made. The Secretary of State must also include in his annual report a number of other details pertinent to this amendment. I am confident that this will provide a rich and informed picture of the Government’s work to protect our national security from risks arising from qualifying investments and other acquisitions of control.

As I have said before, for further scrutiny, we welcome the fact that we can follow existing appropriate government procedures for reporting back to Parliament, including through responding to the BEIS Select Committee, which does such an excellent job of scrutinising the work of the department. As the Secretary of State for BEIS said on 13 April, during a session of that committee, the NSI Bill “sits within BEIS” and the powers of the Bill sit with the Secretary of State for BEIS.

The chair of the BEIS Select Committee—who, I remind noble Lords, is an Opposition Member of Parliament—supported the view that his committee should scrutinise the investment security unit as part of its oversight of the department. Therefore, it makes sense that, from a governance perspective, the BEIS committee should be the appropriate scrutinising committee.

As this was discussed at length in Grand Committee, I do not wish to try the patience of the House by repeating the assurance that my noble friend Lord Grimstone, the Minister, provided to the House on the ability of the BEIS Select Committee to request and see materials regarding the work of the investment security unit. Therefore, I hope—it is probably more in hope than expectation—that noble Lords will accept my explanation and feel able to withdraw their amendments.

[Lord West of Spithead (Lab)]

My Lords, I thank all those who had an input in this debate, particularly those supporters. We almost got a full scrum, with the noble Lord, Lord Lansley, added as well—we had a bit of weight there. We are more second than front row, to be quite honest, but I have now found that the Government Minister is actually a hooker, so we have a bit of front row around. As he rightly says, the hooker gets punched by everyone—I am afraid that that is the way that it is going tonight.

I have considerable sympathy for the Minister: I was in that position when I had to argue for 90 days pre-trial detention. Because I am not really a politician, I had actually already said on the “Today” programme that I thought that this was a very dodgy thing to do—and then I had to stand at the Dispatch Box and argue for it. Lo and behold, I am in Guinness World Records for the biggest defeat of the Government since the House ceased being entirely hereditary—so I feel for the Minister.

However, I am afraid I question a couple of the things that he said—for example, the chairman of the BEIS Committee has no objection to my amendment at all, so he was given some wrong information there. I also fear that the Minister has failed to provide an explanation for the Government’s intransigence and indeed seems willing to stop Parliament having a mechanism whereby it can scrutinise highly classified intelligence, based on which key decisions are made. To cut it short—I have spoken for far too long—I therefore have no choice but to test the opinion of the House on this key amendment.

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Moved by

[Lord West of Spithead]

33: Clause 61, page 36, line 33, at end insert—
“(m) in respect of final notifications given, and final orders made, varied or revoked— (i) a summary of the decision of the Secretary of State under section 26(1), and(ii) a summary provided by the Security Services of any national security risk assessment provided under section 26(3)(a)(ii) relating to each decision under section 26(1).(2A) Where the Secretary of State considers that publication of any information listed in paragraph (2)(m) would be contrary to the interests of national security, those details may be excluded from publication and instead must be included in a confidential annex to the report provided to the Intelligence and Security Committee of Parliament on the same day that the rest of the report is laid before each House of Parliament.”

National Security and Investment Bill

Lord West of Spithead Excerpts

Consideration of Commons amendments
Wednesday 28th April 2021 Lords Chamber

Moved by

[Lord West of Spithead]

At end insert “and do propose Amendments 11B and 11C in lieu—

11B: Page 36, line 15, at end insert “, except for any confidential annex prepared under subsection (2B) while that subsection is in force”

11C Page 36, line 33, at end insert—
“(2A) Until the condition in subsection (2C) is met, each report must also provide, in respect of final notifications given, and final orders made, varied or revoked—
(a) a summary of the decision of the Secretary of State under section 26(1), and
(b) a summary provided by the Security Services of any national security risk assessment provided under section 26(3)(a)(ii) relating to each decision under section 26(1).
(2B) Until the condition in subsection (2C) is met, where the Secretary of State considers that publication of any information listed in subsection (2A) would be contrary to the interests of national security, those details may be excluded from publication and instead must be included in a confidential annex to the report provided to the Intelligence and Security Committee of Parliament on the same day that the rest of the report is laid before each House of Parliament.
(2C) Subsections (2A) and (2B) have effect only until a revised memorandum of understanding between the Prime Minister and the Intelligence and Security Committee of Parliament under section 2 of the Justice and security Act 2013 has been laid before Parliament which provides for oversight by the Intelligence and Security Committee of the activities of the Secretary of State under section 26 of this Act.””

[Lord West of Spithead (Lab)]

My Lords, the question put back to this House is not whether the Government should take national security risks into account when considering investment but whether Parliament should have oversight of that process—that careful balancing of our national security against our prosperity. This House delivered a very clear message to the Government on Report that if the Bill is to provide the Secretary of State for BEIS with wide-ranging new powers, it must also provide for meaningful oversight of those powers. That meaningful oversight of high-level intelligence can be conducted only by the ISC, as the body which Parliament established for that express purpose.

I thought the strength of feeling in this House on the matter had been very clear, and, indeed, the rugby scrum to which the Minister alluded which I gathered in support had unbelievable knowledge and background in this whole area of intelligence, security and the ISC. It is therefore very disappointing that my amendment was rejected in the other place yesterday. I remain of the view that, without that amendment, the Bill does not provide for meaningful oversight by Parliament. Nevertheless, I have sought yet again to offer the Government an opportunity to see common sense on this and, therefore, rather than insisting on the original amendment, I have tabled this amendment in lieu. It requests the same substantive material—a summary of the decisions by the Secretary of State and a summary by the security services of any national security risk assessment in respect of final notifications given and final orders made, varied or revoked, which can be provided to the ISC in a confidential annexe—but it now provides that that material need not be provided if and when those activities are formally added to the memorandum of understanding, at which point ISC oversight is provided for through that route.

I have already set out why the ISC must have oversight and why it can only be the ISC, so I have no wish to try your Lordships’ patience by repeating those arguments, or indeed those made by noble Lords from across the House who spoke in support of my amendment. The substantive point has been made, and I have to say that the argument has been won—I know that from having talked to people in the other place.

I wish to examine more closely the assertions made more recently by the Government in the other place, as I would not wish any of them to muddy the water on this issue. The Government’s starting point was that the ISC can already scrutinise the information provided to the ISU by the security services. That is indeed the case—we can require the security services to provide us the information which they provide to the ISU on the national security risks—but that is missing the point. What the ISC must be able to scrutinise is the balancing of those security risks against the business elements. It is that crucial balancing which is at the heart of the Bill. There is little point in seeing what the national security risks are if you cannot see what decision has been reached regarding those risks. That is precisely why my amendment makes reference to the decision of the Secretary of State.

Moving on to that decision, the Government’s next argument is that the ISC cannot oversee decisions made by the Secretary of State for BEIS because BEIS is not listed in the ISC’s memorandum of understanding. That is indeed the case but again that is, I am afraid, missing the point, deliberately or otherwise. As I have already explained to noble Lords, the Government gave a commitment to Parliament that the ISC would, through its MoU, oversee all security and intelligence matters across all of government. The seven bodies currently listed on the MoU are those that were carrying out security and intelligence matters in 2013. That list of bodies should be kept and updated, as the Government told Parliament was their intention. It would be very simple to add something such as BEIS to the list.

With that argument dispatched, the Government move on to their next line of defence—that decisions by the Secretary of State for BEIS must be for the BEIS Committee to scrutinise, and that the ISC should not encroach on that remit. That is, I am afraid, a direct contradiction of the Government’s own MoU. The Government have already expressly said that the ISC’s scrutiny will not affect the wider scrutiny of departments such as, for example, the Home Office, FCDO and MoD by parliamentary committees. The same would be true for BEIS. If the decisions by the Secretary of State for Defence or the Home Secretary can be scrutinised by the ISC, why are the decisions by the Secretary of State for BEIS any different? I am curious as to what it is about BEIS that sets it apart and means that the ISC should not oversee it?

At this point, the Government resort to their final argument. I have to say here that I find it rather tenuous to argue that the ISC does not need to provide oversight because the BEIS Select Committee can do it. The Secretary of State for BEIS has written to the chair of the BEIS Select Committee talking about confidential briefings in a most reasonable manner. However, we need to examine what that does not say, which is, “The Government will hand over our top secret information to you, your committee and your staff for you to hold, scrutinise, take notes on, discuss, question us about and report on”. That is because the Government cannot do that. The words being used belie the practicalities of the Government’s own security procedures—unless, of course, the Minister is going to tell us that the Government are prepared to breach their own security procedures.

The proposals do not amount to meaningful scrutiny. I say this with the greatest respect to the BEIS Select Committee, whose chairman, in a most thoughtful and measured speech in the other place yesterday, supported the ISC’s oversight of this area. The BEIS Select Committee does excellent work and should rightfully be the primary oversight body for the work of BEIS and the business elements of the work of the ISU. However, the ISC is the only body that can provide oversight of the intelligence elements and balance them with the business elements. The ISC is the only committee of Parliament that has regular access to protectively marked information that is sensitive for national security reasons. This means that only the ISC is in a position to scrutinise effectively the work of those parts of departments whose work is directly concerned with intelligence and security matters, as the Government have said repeatedly until now.

The Intelligence and Security Committee was created by Parliament to handle classified information where Select Committees could not. The Government committed to using the ISC to scrutinise all their intelligence and security functions. Now we are told that the BEIS Committee is able to do exactly that. In this instance, apparently, the ISC is no longer needed. Let me be clear: the ISC currently does oversee this area of work, so the Government’s proposal is deliberately removing it from ISC oversight. Is that what is going to happen in the future? Will security work be hived off successively to departments that will be told that the ISC cannot oversee them because it is not listed in a nine year-old MoU that the Government have failed to keep up to date?

I see the longer-term consequences of rejecting our amendments and wonder whether more areas of government are destined to follow suit. This could become a very slippery slope, denying Parliament and, indeed, the nation proper scrutiny of intelligence decisions if we do not take action now. For this reason, I have sought to offer the Government yet another opportunity. Rather than simply retabling my original amendment, I have offered them an alternative. Either the Government can provide the ISC with a classified annexe covering security and the Secretary of State’s decision, or they can add those decisions to the existing MoU.

My amendment is a reasonable attempt to provide the Government with a way forward and a way out. I know that the Minister opposite has been put in a very difficult position on this issue. While recognising the strength of feeling across this House, there must be meaningful oversight of these new powers, and that can only mean the ISC. I am not looking for more work for myself, I can tell noble Lords, but only the ISC can do it. I beg to move.

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[Lord Callanan (Con)]

I thank all noble Lords who have contributed; it has again been a good demonstration of the quality of contributions from this House. I have listened very carefully to the points that have been made, in particular by the noble Lords, Lord West, Lord Campbell and Lord Butler, and by my noble friend Lord Lansley.

I will address the primary issue head on. This was raised by the noble Lords, Lord West and Lord Campbell, and the noble Baroness, Lady Hayter. It is the issue of whether the BEIS Select Committee will have access to “top secret” information. We will make sure that the BEIS Select Committee has the information that it needs to fulfil its remit and scrutinise the work of the ISU under the NSI regime. Much of this is unlikely to be highly classified and, where the Select Committee’s questioning touches on areas of high classification, it is likely that the relevant information could be given in a way that does not require as high a classification and provided to the committee confidentially. If, however, the BEIS Select Committee requires access to highly classified information, we will carefully consider how best to provide it, while maintaining information security in close collaboration with the committee’s chair.

Another point made by the noble Lord, Lord West, was that the current system for scrutiny is run out of the Cabinet Office and therefore comes under the ISC’s unit, so the Bill reduces the ISC’s remit. The Government’s main powers to scrutinise and intervene in mergers and acquisitions for national security reasons in fact come from the Enterprise Act 2002; the powers under that Act sit with the Secretaries of State for BEIS and DCMS, not in the Cabinet Office. Giving the BEIS Select Committee oversight of the new NSI regime is entirely in keeping with this and does not represent a reduction of the ISC’s remit.

A point made particularly by my noble friend Lord Lansley was about changing the memorandum of understanding, but the question here is not whether the MoU allows for the role proposed by noble Lords, but whether that role is appropriate. Our answer—and I appreciate that noble Lords will disagree—is no. The Government have made their case, which comes off the back of a resounding vote by the elected Chamber, that no change should be made to the Bill in relation to reporting to the Intelligence and Security Committee. We maintain our view that the BEIS Select Committee remains the place for scrutiny of the investment security unit and that the Intelligence and Security Committee remains the appropriate committee for scrutiny of the intelligence services, in accordance with the memorandum of understanding and the Justice and Security Act 2013. With acknowledgement to all who have spoken and with regard to the points that I have made, I appreciate the difference of opinion on this, but ask once again that the House does not insist on these amendments.

[Lord West of Spithead (Lab)]

My Lords, first, I thank those who spoke in support of my Motion. They have an incredible amount of knowledge about this issue. I find the Government’s position extraordinary and I feel sorry for the Minister opposite—for whom I have great respect—who has to parrot arrant nonsense. As an admiral and a captain who had defaulters in front of me, I have had people spouting arrant nonsense at me and I know how to spot it. This is arrant nonsense and I find that rather sad. It is unfortunate that he has to do this as I am sure that, deep down, he does not believe it, because he is an intelligent chap. I am appalled that the Government are not willing to give ground on this and I cannot understand why—I really cannot. This is not a great party-political issue or anything like that. It is quite extraordinary, so I am afraid that I will test the opinion of the House.